Q & A: Pain and gain in the global economy

Times reporter Al Scott took us to the fields of Peru to show how globalization is reshaping the Washington economy. He answered your questions on June 30.
Read the series: Part 1 | Part 2

How can U.S. farmers compete with those from foreign countries when ours are strapped with all the environmental regulations our laws that consumers demand (including minimum wage)? (I'm in favor of the environment and quality of life, but how can they compensate for this uneven playing field?) — Anne Schreivogl, Anacortes

A.S.: You hear this argument a lot. We play by the rules and they don't. Here are two responses: First, an uneven playing field is not only a good thing, it's a cornerstone of trade's wealth effect. Wealth grows if someone else can make a product more cheaply than we can make it ourselves. So we benefit as consumers from those disparities. Our abundance of inexpensive produce and consumer goods is built on it. Second, to sell asparagus to the U.S., Peru has to play by global trading rules and meet U.S. standards. This is one of the many unsung benefits of the World Trade Organization — it sets standards. Activists say the standards don't go far enough on labor rights and environmental protection and that's an excellent point. But attacking the WTO and free trade seems to be attacking the wrong culprit. Minimum wage seems like weak argument. Wages here are ten times more than in Peru, so even cutting a dollar from Washington's $7.16 minimum wage isn't going to close that gap. The rational response for farmers, it seems to me, is to lobby for good laws here and abroad — and be smart about marketing their products.

Is it possible to measure the cultural costs in Peru? How are communities handling the shift to factory work? — Mark Deichmiller, seattletimes.com

A.S.: It's hard to say because I didn't visit the hill communities. Obviously, migration and job changes have cultural impact. People are in fact leaving mountain villages to work at farm and factory jobs in the coastal desert, and so they leave some culture behind and adapt to a new environment with people from other parts of the country. It's a melting pot, something immigrants have experienced for centuries as they search for a better life. Yet as we know, many bring cultural traditions to the new place and share them. In Peru, I saw pictures of traditional dances taking place at the farms — the farm owners were proud to show me those. And I heard about cultural activities going on in the new settlements. But I didn't see it directly.

What role does organic produce play in the local and global market? In general or for example with asparagus and in Peru. — Anne Schreivogl, Anacortes

A.S.: Organic crops can help farmers earn more. Consumers pay extra for organic produce because they want a product with specific qualities. It's essentially the same thing Starbucks has done with coffee, or Copper River with salmon. Create a brand and charge more. Asparagus growers in Peru, while not organic per se, say they try to reduce pesticides and use natural pest control where possible so they can sell more in the U.S., where they know consumers are concerned about those things. Washington farmers do the same. One powerful role consumers can play is to ask the grocer for more organic food, better food labeling, lower pesticide use — and be willing to pay for it.

Globalization is here to stay - the economics of specialization are irrefutable. The best response for America is to become an innovation-centric economy. We think that we are an innovation economy, but there is a surprise awaiting us around the corner and we have nobody but ourselves to blame for not anticipating it.

Much like Mexico was in denial 10 years ago that they would compete with China for manufacturing and lost an opportunity to become a knowledge economy... America is now in denial that the bottom can fall out and we'll compete not only in agriculture but also for our knowledge industries.

There is a flaw in American domestic policy/economy that few people are aware of. We fail to understand that money does not represent gold, silver, or oil - money represents human productivity. In order to increase money (wealth) there must be an increase in productivity. This can be done by either lowering wages or innovating new technologies. — Daniel R. Robles, Mukilteo

A.S.: That's an ironic point - that lowering wages would increase productivity. I suppose it's true in a strict economic sense: since wages are a cost of production, lowering them creates a greater "value add" of wealth if the end product sells for the same price. But cutting wages isn't going to make workers work harder. On the broader point, policymakers should recognize that trade isn't the culprit, and that the days of ignoring global competition are over. Policies that advance a country's ability to make things the world will buy are the best way to secure jobs for the future. Microsoft has certainly done that.

In countries like Peru, are there many organized groups that oppose increased international trade? If so, who are they and what is their perspective? — Eric, Seattle

A.S.: Organized opposition to international trade exists around the world. In Peru, it didn't appear to be as strong as it is here in the U.S. or in Europe. However, there are farmers in Peru who are deeply opposed to U.S. crops coming into Peru. The cotton farmers are perhaps the largest group. As I noted in the article, they want Peru to use tariffs to keep out cheap U.S. cotton so they can make a profit with their crops. That's very similar to the arguments made by labor and farm groups in the U.S. concerned about losing out to competitors. The trade-off if tariffs and other barriers are imposed is that trade will be reduced.

One of the raps on globalization is that it's fine for the established market economies like the U.S., but can lead to overspecialization in emerging economies like Peru. Basically, it's too many eggs and too few baskets to keep these economies stable. Is Peru banking too heavily on asparagus and other agriculture products? — Mark Deichmiller, seattletimes.com

A.S.: I'm not sure what's meant by "overspecialization." Peru's economy is already pretty specialized, and asparagus is one of the things helping to broaden the economy. For example, mining alone accounts for about half of Peru's exports. Agriculture is about 10 percent. But here's the important point: Sales of nontraditional agricultural exports, like asparagus, and including livestock, now total twice as much as traditional agricultural exports, like coffee. So that's where growth is happening. It's still a small piece of the pie, but it's a growing piece. The people I spoke with in Peru said that what Peru needs is 10 more industries like asparagus.

Al Scott: One of the best suggestions came from a Peruvian I interviewed, Jose Chlimper. His company is Peru's single largest fresh asparagus exporter. He came to Washington earlier this month and spent a day meeting with farmers. He said he saw many excellent farmers whose yield is higher than his, although for a shorter growing season. He said he thought their mistake was trying to save the canneries. Canned asparagus is literally a dying market - it's eaten mainly by older generations who didn't have fresh. But fresh asparagus is more popular and sales are growing. Suppose Washington spent money to build a packing house for fresh asparagus that was efficient and technologically sophisticated. Then suppose it branded the product as a highly desireable cancer-reducing, full of antioxidants health food. Then it might really own the asparagus business for the harvest season, and farmers could stay in business.